The Financial Conduct Authority (FCA) of the United Kingdom, as part of its work for guidance on cryptocurrencies, has published a document which clarifies which tokens are within their jurisdiction. To do this, it has defined and differentiated securities tokens, electronic money tokens and facilities tokens.
The guide issued by the FCA largely reflects the proposals of the CP19 / 3 consultation document, which was published earlier this year for public consultation.
The guide specifies when certain types of cryptocurrencies could be found under the jurisdiction of the FCA. In that sense, bitcoin and ether have been considered as exchange tokens outside the scope of the FCA, although rules on money laundering prevention apply.
Importantly, the guide provides a definition of the value tokens. At the time of their issuance, these assets behave as debt shares or instruments, including as property rights, which is why they would qualify as a "specific investment", which is why they are the responsibility of the FCA.
On the contrary, utility tokens do not grant the same rights as regulated financial instruments and generally fall outside the scope of the FCA, except in cases where they conform to the definition of electronic money and belong to a new category of electronic money tokens.
Also, some stablecoin could fit in the definition of electronic money, therefore, they would be subject to FCA supervision.
FCA strategy and competition executive director Christopher Woolard commented that “It is a small, complex and evolving market that covers a wide range of activities. Today's guide will help clarify what crypto assets fall within our regulatory perimeter.«.
The FCA mentioned that a company can issue securities tokens without the need for a regulatory license, in the same way that the issuance of shares does not require a license, however, in any scenario in which the tokens, advisors and brokers that operate they handle them, as well as the financial promotions regime, they will need authorization.
If a securities token is negotiable in the capital market, it will also be considered a transferable value under the Financial Instruments Markets Directive of the European Union (MiFID), so that regime will also apply, the FCA said.
Finally, a controversial issue of the FCA, outside the guidelines, is the proposal to ban cryptocurrency derivatives for retail investors, including options, futures, difference contracts and exchange bonds with underlying cryptocurrencies such as bitcoin